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ADDX tokenizes private equity fund of funds
Accredited investors gain access to the fund at a minimum size of US$10,000
The Asset 11 May 2022

Private market exchange ADDX has listed on its digital platform a private equity fund of funds from Singapore-based Fullerton Fund Management.

The Fullerton Optimised Alpha Fund is a closed-end fund targeting 8% to 12% in returns per annum over its fund life of seven years. The fund will be invested in a portfolio of six to eight private equity and private credit funds.

The underlying assets of the fund will be diversified by geography, across North America, Europe and Asia, and by strategy, across buyout, growth, secondaries and private or distressed credit. The fund will focus on thematic sectors, such as defensive, tech-enabled, new economy, post-Covid dislocation and recovery, as well as ESG-aligned sectors.

Accredited individual investors on ADDX can access the Fullerton fund at a minimum size of US$10,000, instead of the US$250,000 required through traditional, non-tokenized channels. A liquidity option in the form of quarterly gated redemptions is available to investors.

Tokenization is the digitization of an asset, in this case a traditional security, using blockchain and smart contract technology. By reducing the need for intermediaries and manual work, ADDX says, tokenization makes it easier to administer the security, with benefits seen across different stages of its life cycle, including issuance, distribution and custody.

ADDX chief executive officer Oi-Yee Choo notes: “By bringing down the barrier to entry, ADDX is contributing to a fair and level playing field for individual investors. At a time when rising inflation is a source of anxiety worldwide, strategies that help investors to better preserve and grow their wealth are needed more than ever.”

Choo also notes that private equity has been outperforming public equity globally. “Adding a private equity allocation to one’s portfolio has been demonstrated to enhance overall returns while reducing volatility. This is why institutional investors like pension funds typically have 20% to 30% of their capital in the private markets.”

Fullerton manages assets across public and private markets for a wide range of clients including government entities, sovereign wealth funds, pension plans, insurance companies, private wealth and retail clients. It is part of multi-asset management group Seviora, a holding company established by Temasek. NTUC Income, a leading Singapore insurer, is a minority shareholder of Fullerton.

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